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Investments | 12 Months Ended
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Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract] |
Investments | 2) Investments The Company’s investments as of December 31, 2022 are summarized as follows: Schedule of Investments
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
December 31, 2022: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities, available for sale, at estimated fair value: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ | 93,182,210 |  |  | $ | 180,643 |  |  | $ | (2,685,277 | ) |  | $ | 90,677,576 |
Obligations of states and political subdivisions |  |  | 6,675,071 |  |  |  | 13,869 |  |  |  | (458,137 | ) |  |  | 6,230,803 |
Corporate securities including public utilities |  |  | 229,141,544 |  |  |  | 1,909,630 |  |  |  | (11,930,773 | ) |  |  | 219,120,401 |
Mortgage-backed securities |  |  | 33,501,686 |  |  |  | 168,700 |  |  |  | (4,100,674 | ) |  |  | 29,569,712 |
Redeemable preferred stock |  |  | 250,000 |  |  |  | 10,000 |  |  |  | - |  |  |  | 260,000 |
Total fixed maturity securities available for sale |  | $ | 362,750,511 |  |  | $ | 2,282,842 |  |  | $ | (19,174,861 | ) |  | $ | 345,858,492 |
Equity securities at estimated fair value: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Industrial, miscellaneous and all other |  | $ | 9,942,265 |  |  | $ | 2,688,375 |  |  | $ | (948,114 | ) |  | $ | 11,682,526 |
Total equity securities at estimated fair value |  | $ | 9,942,265 |  |  | $ | 2,688,375 |  |  | $ | (948,114 | ) |  | $ | 11,682,526 |
Mortgage loans held for investment at amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 93,355,623 |  |  |  |  |  |  |  |  |  |  |  |  |
Residential construction |  |  | 172,516,125 |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 46,311,955 |  |  |  |  |  |  |  |  |  |  |  |  |
Less: Unamortized deferred loan fees, net |  |  | (1,746,605 | ) |  |  |  |  |  |  |  |  |  |  |  |
Less: Allowance for loan losses |  |  | (1,970,311 | ) |  |  |  |  |  |  |  |  |  |  |  |
Less: Net discounts |  |  | (342,860 | ) |  |  |  |  |  |  |  |  |  |  |  |
Total mortgage loans held for investment |  | $ | 308,123,927 |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate held for investment - net of accumulated depreciation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 38,437,960 |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 152,890,656 |  |  |  |  |  |  |  |  |  |  |  |  |
Total real estate held for investment |  | $ | 191,328,616 |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate held for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 11,010,029 |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 151,553 |  |  |  |  |  |  |  |  |  |  |  |  |
Total real estate held for sale |  | $ | 11,161,582 |  |  |  |  |  |  |  |  |  |  |  |  |
Other investments and policy loans at amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Policy loans |  | $ | 13,095,473 |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance assignments |  |  | 46,942,536 |  |  |  |  |  |  |  |  |  |  |  |  |
Federal Home Loan Bank stock (1) |  |  | 2,600,300 |  |  |  |  |  |  |  |  |  |  |  |  |
Other investments |  |  | 9,479,798 |  |  |  |  |  |  |  |  |  |  |  |  |
Less: Allowance for doubtful accounts |  |  | (1,609,951 | ) |  |  |  |  |  |  |  |  |  |  |  |
Total policy loans and other investments |  | $ | 70,508,156 |  |  |  |  |  |  |  |  |  |  |  |  |
Accrued investment income |  | $ | 10,299,826 |  |  |  |  |  |  |  |  |  |  |  |  |
Total investments |  | $ | 948,963,125 |  |  |  |  |  |  |  |  |  |  |  |  |
(1) |  | Includes $938,500 of Membership stock and $1,661,800 of Activity stock due to short-term advances and letters of credit.
SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) The Company’s investments as of December 31, 2021 are summarized as follows:
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
December 31, 2021: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities, available for sale, at estimated fair value: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ | 22,307,736 |  |  | $ | 578,567 |  |  | $ | - |  |  | $ | 22,886,303 |
Obligations of states and political subdivisions |  |  | 4,649,917 |  |  |  | 212,803 |  |  |  | (1,989 | ) |  |  | 4,860,731 |
Corporate securities including public utilities |  |  | 174,711,061 |  |  |  | 21,791,370 |  |  |  | (353,668 | ) |  |  | 196,148,763 |
Mortgage-backed securities |  |  | 34,365,382 |  |  |  | 905,159 |  |  |  | (161,332 | ) |  |  | 35,109,209 |
Redeemable preferred stock |  |  | 269,214 |  |  |  | 13,383 |  |  |  | - |  |  |  | 282,597 |
Total fixed maturity securities available for sale |  | $ | 236,303,310 |  |  | $ | 23,501,282 |  |  | $ | (516,989 | ) |  | $ | 259,287,603 |
Equity securities at estimated fair value: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Industrial, miscellaneous and all other |  | $ | 8,275,772 |  |  | $ | 3,626,444 |  |  | $ | (305,802 | ) |  | $ | 11,596,414 |
Total equity securities at estimated fair value |  | $ | 8,275,772 |  |  | $ | 3,626,444 |  |  | $ | (305,802 | ) |  | $ | 11,596,414 |
Mortgage loans held for investment at amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 53,533,712 |  |  |  |  |  |  |  |  |  |  |  |  |
Residential construction |  |  | 175,117,783 |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 51,683,022 |  |  |  |  |  |  |  |  |  |  |  |  |
Less: Unamortized deferred loan fees, net |  |  | (918,586 | ) |  |  |  |  |  |  |  |  |  |  |  |
Less: Allowance for loan losses |  |  | (1,699,902 | ) |  |  |  |  |  |  |  |  |  |  |  |
Less: Net discounts |  |  | (409,983 | ) |  |  |  |  |  |  |  |  |  |  |  |
Total mortgage loans held for investment |  | $ | 277,306,046 |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate held for investment - net of accumulated depreciation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 41,972,462 |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 155,393,335 |  |  |  |  |  |  |  |  |  |  |  |  |
Total real estate held for investment |  | $ | 197,365,797 |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate held for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 1,190,602 |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 2,540,698 |  |  |  |  |  |  |  |  |  |  |  |  |
Total real estate held for sale |  | $ | 3,731,300 |  |  |  |  |  |  |  |  |  |  |  |  |
Other investments and policy loans at amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Policy loans |  | $ | 13,478,214 |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance assignments |  |  | 48,632,808 |  |  |  |  |  |  |  |  |  |  |  |  |
Federal Home Loan Bank stock (1) |  |  | 2,547,100 |  |  |  |  |  |  |  |  |  |  |  |  |
Other investments |  |  | 4,983,251 |  |  |  |  |  |  |  |  |  |  |  |  |
Less: Allowance for doubtful accounts |  |  | (1,686,218 | ) |  |  |  |  |  |  |  |  |  |  |  |
Total policy loans and other investments |  | $ | 67,955,155 |  |  |  |  |  |  |  |  |  |  |  |  |
Accrued investment income |  | $ | 6,313,012 |  |  |  |  |  |  |  |  |  |  |  |  |
Total investments |  | $ | 823,555,327 |  |  |  |  |  |  |  |  |  |  |  |  |
(1) |  | Includes $905,700 of Membership stock and $1,641,400 of Activity stock due to short-term advances and letters of credit.
SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) Fixed Maturity Securities The following table summarizes unrealized losses on fixed maturities securities available for sale that were carried at estimated fair value at December 31, 2022 and at December 31, 2021. The unrealized losses were primarily related to interest rate fluctuations and inflation. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities: Schedule of Fair Value of Fixed Maturity Securities
|  | Unrealized Losses for Less than Twelve Months |  |  | Fair Value |  |  | Unrealized Losses for More than Twelve Months |  |  | Fair Value |  |  | Total Unrealized Loss |  |  | Fair Value |
At December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ | 2,685,277 |  |  | $ | 79,400,753 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,685,277 |  |  | $ | 79,400,753 |
Obligations of States and Political Subdivisions |  |  | 378,067 |  |  |  | 5,467,910 |  |  |  | 80,070 |  |  |  | 429,020 |  |  |  | 458,137 |  |  |  | 5,896,930 |
Corporate Securities |  |  | 10,935,114 |  |  |  | 162,995,969 |  |  |  | 995,659 |  |  |  | 5,781,822 |  |  |  | 11,930,773 |  |  |  | 168,777,791 |
Mortgage and other asset-backed securities |  |  | 2,884,731 |  |  |  | 19,909,907 |  |  |  | 1,215,943 |  |  |  | 6,978,745 |  |  |  | 4,100,674 |  |  |  | 26,888,652 |
Total unrealized losses |  | $ | 16,883,189 |  |  | $ | 267,774,539 |  |  | $ | 2,291,672 |  |  | $ | 13,189,587 |  |  | $ | 19,174,861 |  |  | $ | 280,964,126 |
At December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Obligations of States and Political Subdivisions |  | $ | 1,989 |  |  | $ | 548,715 |  |  | $ | - |  |  | $ | - |  |  | $ | 1,989 |  |  | $ | 548,715 |
Corporate Securities |  |  | 73,507 |  |  |  | 4,638,750 |  |  |  | 280,161 |  |  |  | 3,771,813 |  |  |  | 353,668 |  |  |  | 8,410,563 |
Mortgage and other asset-backed securities |  |  | 72,952 |  |  |  | 7,934,760 |  |  |  | 88,380 |  |  |  | 1,582,804 |  |  |  | 161,332 |  |  |  | 9,517,564 |
Total unrealized losses |  | $ | 148,448 |  |  | $ | 13,122,225 |  |  | $ | 368,541 |  |  | $ | 5,354,617 |  |  | $ | 516,989 |  |  | $ | 18,476,842 |
There were 713 securities with fair value of 93.6% of amortized cost at December 31, 2022. There were 55 securities with fair value of 97.3% of amortized cost at December 31, 2021. Credit losses of nil and $39,502 have been recognized for the years ended December 31, 2022 and 2021, respectively. On a quarterly basis, the Company evaluates its fixed maturity securities classified as available for sale. This evaluation includes a review of current ratings by the National Association of Insurance Commissions (“NAIC”). Securities with a rating of 1 or 2 are considered investment grade and are not reviewed for impairment, unless current market or recent company news could lead to a credit downgrade. Securities with ratings of 3 to 5 are evaluated for impairment. Securities with a rating of 6 are automatically determined to be impaired and are written down. The evaluation involves an analysis of the securities in relation to historical values, interest payment history, projected earnings and revenue growth rates as well as a review of the reason for a downgrade in the NAIC rating. Based on the analysis of a security that is rated 3 to 5, a determination is made whether the security will likely make interest and principal payments in accordance with the terms of the financial instrument. If it is unlikely that the security will meet contractual obligations, the loss is considered to be other than temporary, the security is written down to the new anticipated market value and an impairment loss is recognized. The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements, are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments. SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) The following table presents a rollforward of the Company’s cumulative other than temporary credit impairments (“OTTI”) recognized in earnings on fixed maturity securities available for sale. Schedule of Earnings on Fixed Maturity Securities
|  | 2022 |  |  | 2021 |
Balance of credit-related OTTI at January 1 |  | $ | 264,977 |  |  | $ | 370,975 |
Additions for credit impairments recognized on: |  |  |  |  |  |  |  |
Securities not previously impaired |  |  | - |  |  |  | 39,502 |
Securities previously impaired |  |  | - |  |  |  | - |
Reductions for credit impairments previously recognized on: |  |  |  |  |  |  |  |
Securities that matured or were sold during the period (realized) |  |  | (39,502 | ) |  |  | (145,500 | )
Securities due to an increase in expected cash flows |  |  | - |  |  |  | - |
Balance of credit-related OTTI at December 31 |  | $ | 225,475 |  |  | $ | 264,977 |
The following table presents the amortized cost and estimated fair value of fixed maturity securities available for sale at December 31, 2022, by contractual maturity. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Schedule of Investments Classified by Contractual Maturity Date
|  | Amortized Cost |  |  | Estimated Fair Value |
Due in 1 year |  | $ | - |  |  | $ | - |
Due in 2-5 years |  |  | 139,431,212 |  |  |  | 135,093,083 |
Due in 5-10 years |  |  | 87,552,213 |  |  |  | 84,011,366 |
Due in more than 10 years |  |  | 102,015,400 |  |  |  | 96,924,331 |
Mortgage-backed securities |  |  | 33,501,686 |  |  |  | 29,569,712 |
Redeemable preferred stock |  |  | 250,000 |  |  |  | 260,000 |
Total |  | $ | 362,750,511 |  |  | $ | 345,858,492 |
The Company is a member of the Federal Home Loan Bank of Des Moines and Dallas (“FHLB”). The Company pledged a total of $93,034,880, at estimated fair value, of fixed maturity securities with the FHLB at December 31, 2022. These securities are used as collateral on any cash borrowings from the FHLB. As of December 31, 2022, the Company owed nil to the FHLB and its estimated maximum borrowing capacity was $86,032,116. SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) Investment Related Earnings The following table presents the net realized gains and losses from sales, calls, and maturities, unrealized gains and losses on equity securities, and other than temporary impairments from investments and other assets. Schedule of Gain (Loss) on Investments
|  |  | 2022 |  |  |  | 2021 |
|  | Years Ended December 31 |
|  | 2022 |  |  | 2021 |
Fixed maturity securities available for sale: |  |  |  |  |  |  |  |
Gross realized gains |  | $ | 205,949 |  |  | $ | 984,740 |
Gross realized losses |  |  | (43,776 | ) |  |  | (139,728 | )
Other than temporary impairments |  |  | - |  |  |  | (39,502 | )
Equity securities: |  |  |  |  |  |  |  |
Gains (losses) on securities sold |  |  | (10,519 | ) |  |  | 390,597 |
Unrealized gains (losses) on securities held at the end of the period |  |  | (2,109,556 | ) |  |  | 2,732,130 |
Mortgage loans held for investment: |  |  |  |  |  |  |  |
Gross realized gains |  |  | - |  |  |  | 1,890,826 |
Gross realized losses |  |  | - |  |  |  | (4,190 | )
Real estate held for investment and sale: |  |  |  |  |  |  |  |
Gross realized gains |  |  | 1,239,332 |  |  |  | 2,347,924 |
Gross realized losses |  |  | (825,593 | ) |  |  | (2,426,428 | )
Other assets, including call and put option derivatives: |  |  |  |  |  |  |  |
Gross realized gains |  |  | 686,703 |  |  |  | 547,785 |
Gross realized losses |  |  | - |  |  |  | (58,522 | )
Total |  | $ | (857,460 | ) |  | $ | 6,225,632 |
The net realized gains and losses on the sale of securities are recorded on the trade date, and the cost of the securities sold is determined using the specific identification method. Net realized gains and losses includes gains and losses by the restricted assets and cemetery perpetual care trust investments of the cemeteries and mortuaries of $817,000 in net losses and $933,045 in net gains for the years ended December 31, 2022 and 2021, respectively. Information regarding sales of fixed maturity securities available for sale is presented as follows. Schedule of Major Categories of Net Investment Income
|  | 2022 |  |  | 2021 |
|  | Years Ended December 31 |
|  | 2022 |  |  | 2021 |
Proceeds from sales |  | $ | 3,091,105 |  |  | $ | 2,896,351 |
Gross realized gains |  |  | 24,281 |  |  |  | 208,698 |
Gross realized losses |  |  | (32,976 | ) |  |  | (4,046 | )
SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) Major categories of net investment income were as follows:
|  | 2022 |  |  | 2021 |
|  | Years Ended December 31 |
|  | 2022 |  |  | 2021 |
Fixed maturity securities available for sale |  | $ | 12,395,764 |  |  | $ | 10,769,979 |
Equity securities |  |  | 511,118 |  |  |  | 446,337 |
Mortgage loans held for investment |  |  | 34,949,763 |  |  |  | 28,758,614 |
Real estate held for investment and sale |  |  | 14,563,269 |  |  |  | 12,334,989 |
Policy loans |  |  | 932,362 |  |  |  | 940,890 |
Insurance assignments |  |  | 18,112,840 |  |  |  | 19,062,052 |
Other investments |  |  | 518,865 |  |  |  | 131,145 |
Cash and cash equivalents |  |  | 1,666,945 |  |  |  | 235,470 |
Gross investment income |  |  | 83,650,926 |  |  |  | 72,679,476 |
Investment expenses |  |  | (17,453,334 | ) |  |  | (14,414,793 | )
Net investment income |  | $ | 66,197,592 |  |  | $ | 58,264,683 |
Net investment income includes income earned by the restricted assets and cemetery perpetual care trust investments of the cemeteries and mortuaries of $2,404,277 and $1,472,295 for the years ended December 31, 2022 and 2021, respectively. Net investment income on real estate consists primarily of rental revenue. Investment expenses consist primarily of depreciation, property taxes, operating expenses of real estate and an estimated portion of administrative expenses relating to investment activities. Securities on deposit for regulatory authorities as required by law amounted to $11,032,165 and $10,168,853 at December 31, 2022 and 2021, respectively (the December 31, 2021 amount has been corrected from that previously reported due to a typographical error). The restricted securities are included in various assets under investments on the accompanying consolidated balance sheets. There were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses) at December 31, 2022, other than investments issued or guaranteed by the United States Government. Real Estate Held for Investment and Held for Sale The Company strategically deploys resources into real estate to match the income and yield durations of its primary obligations. The sources for these real estate assets come through its various business segments in the form of acquisition, development and mortgage foreclosures. The Company reports real estate held for investment and held for sale pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements. Commercial Real Estate Held for Investment and Held for Sale The Company owns and manages commercial real estate assets as a means of generating investment income. These assets are acquired in accordance with the Company’s goals and objectives for risk-adjusted returns. Due diligence is conducted on each asset using internal and third-party reports. Geographic locations and asset classes of the investment activity is determined by senior management under the direction of the Board of Directors. SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) The Company employs full-time employees to attend to the day-to-day operations of those assets within the greater Salt Lake area and close surrounding markets. The Company utilizes third-party property managers when the geographic boundary does not warrant full-time staff or through strategic lease-up periods. The Company generally looks to acquire assets in regions that are high growth regions for employment and population and assets that provide operational efficiencies. The Company currently owns and operates nine commercial properties in three states. These properties include office buildings, flex office space, and includes the redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City, Utah. The Company does use debt in strategic cases to leverage established yields or to acquire a higher quality or different class of asset. The aggregated net ending balance of commercial real estate that serves as collateral for bank loans was $129,330,119 and $134,251,205 as of December 31, 2022 and 2021, respectively. The associated bank loan carrying values totaled $97,112,131 and $85,663,148 as of December 31, 2022 and 2021, respectively. During the years ended December 31, 2022 and 2021, the Company recorded impairment losses on commercial real estate held for sale of nil and $2,028,378, respectively. Impairment losses are included in gains (losses) on investments and other assets on the consolidated statements of earnings. During the years ended December 31, 2022 and 2021, the Company recorded depreciation expense on commercial real estate held for investment of $6,090,575 and $3,592,207, respectively. Commercial real estate held for investment is stated at cost and is depreciated over the estimated useful life, primarily using the straight-line method. Depreciation is included in net investment income on the consolidated statements of earnings. Operating leases arise from the leasing of the Company’s commercial real estate held for investment. Initial lease terms generally range from three to ten years. The Company’s commercial real estate held for investment is summarized as follows: Schedule of Commercial Real Estate Investment
|  | Net Ending Balance |  |  | Total Square Footage |
|  | December 31 |  |  | December 31 |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Utah (1) |  | $ | 147,627,946 |  |  | $ | 150,105,948 |  |  |  | 625,920 |  |  |  | 625,920 |
Louisiana |  |  | 2,380,847 |  |  |  | 2,426,612 |  |  |  | 31,778 |  |  |  | 31,778 |
Mississippi |  |  | 2,881,863 |  |  |  | 2,860,775 |  |  |  | 19,694 |  |  |  | 19,694 |
|  | $ | 152,890,656 |  |  | $ | 155,393,335 |  |  |  | 677,392 |  |  |  | 677,392 |
(1) |  | Includes Center53 phase 1 and phase 2
SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) The following is a maturity analysis of the annual undiscounted cash flows of the operating lease payments to be received. Schedule of Annual Undiscounted Cash Flows of Operating Lease Payments
2023 |  | $ | 11,650,181 |
2024 |  |  | 10,310,144 |
2025 |  |  | 9,933,831 |
2026 |  |  | 8,282,769 |
2027 |  |  | 6,720,796 |
Thereafter |  |  | 50,530,849 |
Total |  | $ | 97,428,570 |
The Company’s commercial real estate held for sale is summarized as follows:
|  | Net Ending Balance |  |  | Total Square Footage |
|  | December 31 |  |  | December 31 |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Kansas |  | $ | - |  |  | $ | 2,000,000 |  |  |  | - |  |  |  | 222,679 |
Louisiana |  |  | - |  |  |  | 389,145 |  |  |  | - |  |  |  | 2,872 |
Mississippi (1) |  |  | 151,553 |  |  |  | 151,553 |  |  |  | - |  |  |  | - |
|  | $ | 151,553 |  |  | $ | 2,540,698 |  |  |  | - |  |  |  | 225,551 |
(1) |  | Approximately 93 acres of undeveloped land
This property is being marketed with the assistance of commercial real estate brokers in the markets where the property is located. Residential Real Estate Held for Investment and Held for Sale The Company occasionally owns a small portfolio of residential homes primarily as a result of loan foreclosures. The Company has the option to sell them or to continue to hold them for cash flow and acceptable returns. The Company also invests in residential subdivision land developments. The Company established Security National Real Estate Services (“SNRE”) to manage the residential portfolio. SNRE cultivates and maintains the preferred vendor relationships necessary to manage costs and quality of work performed on the residential portfolio across the country. During the years ended December 31, 2022 and 2021, the Company recorded impairment losses on residential real estate held for sale of $94,400 and nil, respectively. These impairment losses are included in gains (losses) on investments and other assets on the consolidated statements of earnings. During the years ended December 31, 2022 and 2021, the Company recorded depreciation expense on residential real estate held for investment of $10,592 and $12,850, respectively. Residential real estate held for investment is stated at cost and is depreciated over the estimated useful life, primarily using the straight-line method. Depreciation is included in net investment income on the consolidated statements of earnings. SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) The net ending balance of foreclosed residential real estate included in residential real estate held for investment or sale was $11,010,029 and $1,190,602 as of December 31, 2022 and 2021, respectively. The Company’s residential real estate held for investment is summarized as follows: Schedule of Residential Real Estate Investment
|  | Net Ending Balance |
|  | December 31 |
|  | 2022 |  |  | 2021 |
Utah (1) |  | $ | 38,437,960 |  |  | $ | 41,686,281 |
Washington (2) |  |  | - |  |  |  | 286,181 |
|  | $ | 38,437,960 |  |  | $ | 41,972,462 |
(1) |  | Including subdivision land developments
(2) |  | Improved residential lots
The following table presents additional information regarding the Company’s subdivision land developments in Utah.
|  | December 31 |
|  | 2022 |  |  | 2021 |
Lots available for sale |  |  | 80 |  |  |  | 67 |
Lots to be developed |  |  | 1,131 |  |  |  | 548 |
Ending Balance |  | $ | 38,241,705 |  |  | $ | 41,479,434 |
The Company’s residential real estate held for sale is summarized as follows:
|  | 2022 |  |  | 2021 |
|  | Net Ending Balance |
|  | December 31 |
|  | 2022 |  |  | 2021 |
Utah |  | $ | 11,010,029 |  |  | $ | - |
Nevada |  |  | - |  |  |  | 979,640 |
Texas |  |  | - |  |  |  | 200,962 |
Ohio |  |  | - |  |  |  | 10,000 |
Real estate held for sale |  | $ | 11,010,029 |  |  | $ | 1,190,602 |
These properties are all actively being marketed with the assistance of residential real estate brokers. The Company expects these properties to sell within the coming 12 months. SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) Real Estate Owned and Occupied by the Company The primary business units of the Company occupy a portion of the commercial real estate owned by the Company. As of December 31, 2022, real estate owned and occupied by the Company is summarized as follows: Schedule of Real Estate Owned and Occupied by the Company
Location |  | Business Segment |  | Approximate Square Footage |  |  | Square Footage Occupied by the Company |
433 Ascension Way, Floors 4, 5 and 6, Salt Lake City, UT - Center53 Building 2 |  | Corporate Offices, Life Insurance, Cemetery/Mortuary Operations, and Mortgage Operations and Sales |  |  | 221,000 |  |  |  | 50 | %
1044 River Oaks Dr., Flowood, MS |  | Life Insurance Operations |  |  | 19,694 |  |  |  | 28 | %
1818 Marshall Street, Shreveport, LA (1) |  | Life Insurance Operations |  |  | 12,274 |  |  |  | 100 | %
909 Foisy Street, Alexandria, LA (1) |  | Life Insurance Sales |  |  | 8,059 |  |  |  | 100 | %
812 Sheppard Street, Minden, LA (1) |  | Life Insurance Sales |  |  | 1,560 |  |  |  | 100 | %
1550 N 3rd Street, Jena, LA (1) |  | Life Insurance Sales |  |  | 1,737 |  |  |  | 100 | %
(1) |  | Included in property and equipment on the consolidated balance sheets
Mortgage Loans Held for Investment The Company reports mortgage loans held for investment pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements. Mortgage loans consist of first and second mortgages. The mortgage loans bear interest at rates ranging from 2.0 % to 10.5%, maturity dates range from nine months to 30 years and are secured by real estate. Concentrations of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors do business. At December 31, 2022, the Company had 64%, 10%, 5%, 5%, 3% and 3% of its mortgage loans from borrowers located in the states of Utah, Florida, California, Texas, Nevada and Arizona, respectively. At December 31, 2021, the Company had 70%, 7%, 5%, 4%, 4% and 2% of its mortgage loans from borrowers located in the states of Utah, Florida, California, Texas, Nevada and Arizona, respectively. SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) The Company establishes a valuation allowance for credit losses in its mortgage loans held for investment portfolio. The following table presents the valuation allowance for loan losses as a contra-asset account. Schedule of Allowance for Loan Losses as Contra Asset Account
|  | Commercial |  |  | Residential |  |  | Residential Construction |  |  | Total |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 187,129 |  |  | $ | 1,469,571 |  |  | $ | 43,202 |  |  | $ | 1,699,902 |
Charge-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Provision |  |  | - |  |  |  | 270,409 |  |  |  | - |  |  |  | 270,409 |
Ending balance |  | $ | 187,129 |  |  | $ | 1,739,980 |  |  | $ | 43,202 |  |  | $ | 1,970,311 |
Ending balance: individually evaluated for impairment |  | $ | - |  |  | $ | 225,667 |  |  | $ | - |  |  | $ | 225,667 |
Ending balance: collectively evaluated for impairment |  | $ | 187,129 |  |  | $ | 1,514,313 |  |  | $ | 43,202 |  |  | $ | 1,744,644 |
Mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 46,311,955 |  |  | $ | 93,355,623 |  |  | $ | 172,516,125 |  |  | $ | 312,183,703 |
Ending balance: individually evaluated for impairment |  | $ | 405,000 |  |  | $ | 2,162,385 |  |  | $ | - |  |  | $ | 2,567,385 |
Ending balance: collectively evaluated for impairment |  | $ | 45,906,955 |  |  | $ | 91,193,238 |  |  | $ | 172,516,125 |  |  | $ | 309,616,318 |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 187,129 |  |  | $ | 1,774,796 |  |  | $ | 43,202 |  |  | $ | 2,005,127 |
Charge-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Provision |  |  | - |  |  |  | (305,225 | ) |  |  | - |  |  |  | (305,225 | )
Ending balance |  | $ | 187,129 |  |  | $ | 1,469,571 |  |  | $ | 43,202 |  |  | $ | 1,699,902 |
Ending balance: individually evaluated for impairment |  | $ | - |  |  | $ | 105,384 |  |  | $ | - |  |  | $ | 105,384 |
Ending balance: collectively evaluated for impairment |  | $ | 187,129 |  |  | $ | 1,364,187 |  |  | $ | 43,202 |  |  | $ | 1,594,518 |
Mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 51,683,022 |  |  | $ | 53,533,712 |  |  | $ | 175,117,783 |  |  | $ | 280,334,517 |
Ending balance: individually evaluated for impairment |  | $ | 1,723,372 |  |  | $ | 2,548,656 |  |  | $ | - |  |  | $ | 4,272,028 |
Ending balance: collectively evaluated for impairment |  | $ | 49,959,650 |  |  | $ | 50,985,056 |  |  | $ | 175,117,783 |  |  | $ | 276,062,489 | (1)
(1) | Amount corrected from that previously reported due to a typographical error.
SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) The following table presents the aging of mortgage loans held for investment. Schedule of Aging of Mortgage Loans
|  | Commercial |  |  | Residential |  |  | Residential Construction |  |  | Total |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
30-59 Days Past Due |  | $ | 1,000,000 |  |  | $ | 3,553,390 |  |  | $ | - |  |  | $ | 4,553,390 |
60-89 Days Past Due |  |  | - |  |  |  | 814,184 |  |  |  | - |  |  |  | 814,184 |
Greater Than 90 Days (1) |  |  | - |  |  |  | 1,286,211 |  |  |  | - |  |  |  | 1,286,211 |
In Process of Foreclosure (1) |  |  | 405,000 |  |  |  | 876,174 |  |  |  | - |  |  |  | 1,281,174 |
Total Past Due |  |  | 1,405,000 |  |  |  | 6,529,959 |  |  |  | - |  |  |  | 7,934,959 |
Current |  |  | 44,906,955 |  |  |  | 86,825,664 |  |  |  | 172,516,125 |  |  |  | 304,248,744 |
Total Mortgage Loans |  |  | 46,311,955 |  |  |  | 93,355,623 |  |  |  | 172,516,125 |  |  |  | 312,183,703 |
Allowance for Loan Losses |  |  | (187,129 | ) |  |  | (1,739,980 | ) |  |  | (43,202 | ) |  |  | (1,970,311 | )
Unamortized deferred loan fees, net |  |  | (199,765 | ) |  |  | (1,212,994 | ) |  |  | (333,846 | ) |  |  | (1,746,605 | )
Unamortized discounts, net |  |  | (230,987 | ) |  |  | (111,873 | ) |  |  | - |  |  |  | (342,860 | )
Net Mortgage Loans |  | $ | 45,694,074 |  |  | $ | 90,290,776 |  |  | $ | 172,139,077 |  |  | $ | 308,123,927 |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
30-59 Days Past Due |  | $ | - |  |  | $ | 3,117,826 |  |  | $ | 1,363,127 |  |  | $ | 4,480,953 |
60-89 Days Past Due |  |  | 100,204 |  |  |  | 580,815 |  |  |  | - |  |  |  | 681,019 |
Greater Than 90 Days (1) |  |  | 1,723,372 |  |  |  | 2,052,062 |  |  |  | - |  |  |  | 3,775,434 |
In Process of Foreclosure (1) |  |  | - |  |  |  | 496,594 |  |  |  | - |  |  |  | 496,594 |
Total Past Due |  |  | 1,823,576 |  |  |  | 6,247,297 |  |  |  | 1,363,127 |  |  |  | 9,434,000 |
Current |  |  | 49,859,446 |  |  |  | 47,286,415 |  |  |  | 173,754,656 |  |  |  | 270,900,517 |
Total Mortgage Loans |  |  | 51,683,022 |  |  |  | 53,533,712 |  |  |  | 175,117,783 |  |  |  | 280,334,517 |
Allowance for Loan Losses |  |  | (187,129 | ) |  |  | (1,469,571 | ) |  |  | (43,202 | ) |  |  | (1,699,902 | )
Unamortized deferred loan fees, net |  |  | (36,813 | ) |  |  | (498,600 | ) |  |  | (383,173 | ) |  |  | (918,586 | )
Unamortized discounts, net |  |  | (240,614 | ) |  |  | (169,369 | ) |  |  | - |  |  |  | (409,983 | )
Net Mortgage Loans |  | $ | 51,218,466 |  |  | $ | 51,396,172 |  |  | $ | 174,691,408 |  |  | $ | 277,306,046 |
(1) | Interest income is not recognized on loans past due greater than 90 days or in foreclosure.
SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) Impaired Mortgage Loans Held for Investment Impaired mortgage loans held for investment include loans with a related specific valuation allowance or loans whose carrying amount has been reduced to the expected collectible amount because the impairment has been considered other than temporary. The recorded investment in and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, for each reporting period and the average recorded investment and interest income recognized during the time the loans were impaired are summarized as follows: Schedule of Impaired Mortgage Loans
|  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 405,000 |  |  | $ | 405,000 |  |  | $ | - |  |  | $ | 762,175 |  |  | $ | - |
Residential |  |  | 1,142,494 |  |  |  | 1,142,494 |  |  |  | - |  |  |  | 998,798 |  |  |  | - |
Residential construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 103,976 |  |  |  | - |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Residential |  |  | 1,019,891 |  |  |  | 1,019,891 |  |  |  | 225,667 |  |  |  | 683,922 |  |  |  | - |
Residential construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 405,000 |  |  | $ | 405,000 |  |  | $ | - |  |  | $ | 762,175 |  |  | $ | - |
Residential |  |  | 2,162,385 |  |  |  | 2,162,385 |  |  |  | 225,667 |  |  |  | 1,682,720 |  |  |  | - |
Residential construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 103,976 |  |  |  | - |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 1,723,372 |  |  | $ | 1,723,372 |  |  | $ | - |  |  | $ | 1,053,865 |  |  | $ | - |
Residential |  |  | 1,591,368 |  |  |  | 1,591,368 |  |  |  | - |  |  |  | 2,731,421 |  |  |  | - |
Residential construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 100,481 |  |  |  | - |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Residential |  |  | 957,288 |  |  |  | 957,288 |  |  |  | 105,384 |  |  |  | 726,449 |  |  |  | - |
Residential construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 1,723,372 |  |  | $ | 1,723,372 |  |  | $ | - |  |  | $ | 1,053,865 |  |  | $ | - |
Residential |  |  | 2,548,656 |  |  |  | 2,548,656 |  |  |  | 105,384 |  |  |  | 3,457,870 |  |  |  | - |
Residential construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 100,481 |  |  |  | - |
Credit Risk Profile Based on Performance Status The Company’s mortgage loans held for investment portfolio is monitored based on performance of the loans. Monitoring a mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment. The Company defines non-performing mortgage loans as loans 90 days or greater delinquent or on non-accrual status. SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 2) Investments (Continued) The Company’s performing and non-performing mortgage loans held for investment are summarized as follows: Schedule of Credit Risk of Mortgage Loans Based on Performance Status
|  | Commercial |  |  | Residential |  |  | Residential Construction |  |  | Total |
|  | December 31 |  |  | December 31 |  |  | December 31 |  |  | December 31 |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Performing |  | $ | 45,906,955 |  |  | $ | 49,959,650 |  |  | $ | 91,193,238 |  |  | $ | 50,985,056 |  |  | $ | 172,516,125 |  |  | $ | 175,117,783 |  |  | $ | 309,616,318 |  |  | $ | 276,062,489 |
Non-performing |  |  | 405,000 |  |  |  | 1,723,372 |  |  |  | 2,162,385 |  |  |  | 2,548,656 |  |  |  | - |  |  |  | - |  |  |  | 2,567,385 |  |  |  | 4,272,028 |
Total |  | $ | 46,311,955 |  |  | $ | 51,683,022 |  |  | $ | 93,355,623 |  |  | $ | 53,533,712 |  |  | $ | 172,516,125 |  |  | $ | 175,117,783 |  |  | $ | 312,183,703 |  |  | $ | 280,334,517 |
Non-Accrual Mortgage Loans Held for Investment Once a loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and write off any income that had been accrued. Payments received for loans on a non-accrual status are recognized on a cash basis. Interest income recognized from any payments received for loans on a non-accrual status was immaterial. Accrual of interest resumes if a loan is brought current. Interest not accrued on these loans totals approximately $226,000 and $236,000 as of December 31, 2022 and 2021, respectively. Principal Amounts Due The following table presents the amortized cost and contractual payments on mortgage loans held for investment by category as of December 31, 2022. Expected principal payments may differ from contractual obligations because certain borrowers may elect to pay off mortgage obligations with or without early payment penalties. Schedule of Mortgage loans Held for Investment
|  |  |  |  | Principal |  |  | Principal |  |  | Principal |
|  |  |  |  | Amounts |  |  | Amounts |  |  | Amounts |
|  |  |  |  | Due in |  |  | Due in |  |  | Due |
|  | Total |  |  | 1 Year |  |  | 2-5 Years |  |  | Thereafter |
Residential |  | $ | 93,355,623 |  |  | $ | 1,332,862 |  |  | $ | 10,000,042 |  |  | $ | 82,022,719 |
Residential Construction |  |  | 172,516,125 |  |  |  | 167,805,559 |  |  |  | 4,710,566 |  |  |  | - |
Commercial |  |  | 46,311,955 |  |  |  | 9,405,903 |  |  |  | 28,597,132 |  |  |  | 8,308,920 |
Total |  | $ | 312,183,703 |  |  | $ | 178,544,324 |  |  | $ | 43,307,740 |  |  | $ | 90,331,639 |
SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI https://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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